Ask Question, Ask an Expert


Ask Basic Finance Expert

Suppose that the S&P 500, with a beta of 1.0, has an expected return of 10% and T-bills provide a risk-free return of 4%. ( LO1 )

a. How would you construct a portfolio from these two assets with an expected return of 8%?

b. How would you construct a portfolio from these two assets with a beta of .4?

c. Show that the risk premiums of the portfolios in (a) and (b) are proportional to their betas.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M942851

Have any Question? 

Related Questions in Basic Finance

What is the importance of geotextiles and sand in

What is the importance of geotextiles and sand in reclamation works?

Problem -kevin gmbh a company based in germany has received

Problem - Kevin Gmbh, a company based in Germany, has received today, 7 June 2014, an order to sell 12,000 tons of fertilizer to a client based in Chicago, USA. Kevin's production cost is 280 Euro per ton of fertilizer, ...

Geotechnical instrumentation is frequently employed for

Geotechnical Instrumentation is frequently employed for monitoring the condition of reclamation. Sometimes two piezometers are installed inside the same borehole. What is the reason behind this?

Assignmentdirections answer the following questions on a

Assignment Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assign ...

1a certain investment will pay 10000 in 20 years if the

1)A certain investment will pay $10,000 in 20 years. If the annual return on comparable investments is 8%, what is this investment currently worth? Show your work. 2)You take out a 5-year car loan for $20,000. The loan h ...

1 an experiment is conducted as follows a die is rolled and

1. An experiment is conducted as follows: A die is rolled and the number of spots is noted. If the number of spots is 5 or fewer the experiment is over. If a 6 is rolled, then a coin is tossed and we note if it is H or T ...

Fed policy focused on long-term interest rates why might

Fed Policy Focused on Long-term Interest Rates: Why might the Fed want to focus its efforts on reducing long-term interest rates rather than shortterm interest rates during a weak economy? Explain how it might use a mone ...

Powerpoint presentationassume that you are a social worker

PowerPoint Presentation Assume that you are a social worker for the Department of Children and Families in your state, and you have been asked to present information about a public assistance program of your choice to a ...

Influence of money market activity on working capital

Influence of Money Market Activity on Working Capital : Assume that interest rates for most maturities are unusually high. Also, assume that the net working capital (defined as current assets minus current liabilities) l ...

Elgin battery manufacturers had sales of 920000 in 2009 and

Elgin Battery Manufacturers had sales of $920,000 in 2009 and their cost of goods sold represented 61 percent of sales. Selling and administrative expenses were 10 percent of sales. Depreciation expense was $18,000 and i ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate